Hospital systems love it because they understand that brick and
mortar facilities are not worth as much as they use to be. If they own
physicians’ intellectual property in the form of primary care physicians and
skills in the form of surgeons, the value of the hospital system increases.

The Obama administration also believes that it can bundle the
payment of a treatment and share the savings with the hospital system if the
treatment costs less. If the treatment uses more assets and costs more the
hospital system will not be paid.

In other words, the government and the healthcare insurance
industry want to offload the risk of treatment to the hospital system. They
administration thinks this will force hospital systems to deliver a better
quality of care. You may recall quality of care has not been defined
adequately.

This policy doesn’t work because reasons for hospital
readmissions are multifactorial. Many of those factors are uncontrollable. One
hospital system can also divert the patient to another hospital system or treat
the readmitted patient in the emergency room.

The Obama administration is encouraging Accountable Care
Organizations. There are so many problems in forming, administrating and
managing ACOs that they are destined to fail.

Anyone reading the administration’s propaganda would not think
so, but it is true, and as time goes on it will become apparent.

Finally, hospital systems and physician groups are realizing the
negotiating power they are accumulating by consolidating and integrating
physicians’ practices.

Consolidation is not good
for the patients. It is great for the hospital system and the large independent
physician specialty groups. Physicians who have sold their practices to
hospital systems will not do so well because the hospital systems are in
control of the collections and salaries.

Large medical specialty groups are negotiating with Obamacare’s
new healthcare plans. These providers are demanding, and in some cases
securing, pretty rich reimbursement rates from the new Obamacare health plans.

Hospital systems in a town they dominate are doing the same
thing. The result will be an increase in the costs to the government and the
healthcare insurance companies. They will pass the increased costs on to the
consumers.

The Obama administration told us, at the passage of Obamacare,
that providers would be discounting to get the volume of business that
Obamacare offered as the new legislation banded large groups of patients into
statewide insurance pools.

The defective central premise was that Obamacare would entice
providers to take lower reimbursement because of increased volume.

“The people
that now seem most likely to enter these state-based insurance pools, and buy
the new coverage, represent a costly mix of patients with a lot of pre-existing
medical conditions. The volume is also unlikely to materialize.”

Obamacare has tripped over its central premise. It is not going
to lower costs. It is going to raise costs.

Obamacare has stimulated the consolidation of hospitals and
physician groups that's now rampant in healthcare. This consolidation is
starting to give providers leverage over Obamacare’s health plans.

This unintended consequence of Obamacare was obvious to most
healthcare policy thinkers who believe that control and planning do not work.
Unfortunately, President Obama did not listen to them.

The other thing President Obama did not listen to is that Health
Maintenance Organizations (HMO’s) of the 1980 and 1990s did not work. Obamacare
is a HMO on steroids.

“Under the scheme, doctors are paid lump sums of money to care
for large groups of patients.

Hospital Systems are making believe they are taking Obamacare’s
financial bait. They are using the concept to frighten physicians and buying
local medical practices.

Hospital systems’ goal is to get a geographic monopoly then take
advantage of the negotiating monopoly. Physician groups especially specialty
groups will stay independent of hospital systems, integrate practices and get
in a negotiating reimbursement.

This will increase the cost of medical care. Everyone knows all
healthcare is local. Central control of healthcare is innately flawed.

This is one of the many defects in Obamacare’s structure.

Obamacare has dismantled the last vestiges of local competition
among physicians for patients.

Now Obamacare will have to deal with the physician and hospital
system cartels it has created.

The victims in all of this are patients
and the cost of patient care.

The Obama administration’s public service campaign is starting
to sell Obamacare’s virtues to young people through the NFL, NBA and major
league baseball. It is also signing up non suspecting consumers at supermarkets and churches.

Good luck. I think everyone is starting to catch on.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone